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Comment by jeremyt | Hacker News Reader

Call me crazy, but when I use one of these services, I expect the service to be reflected in the price.

I often wonder what uplift the U.S. economy gets because consumers are lured by an initial low price that doesn't include service fees, taxes, gratuities, etc. It's like an accepted form of bait-and-switch, which is a proven tactic that increases sales.

I'm sure it has some effect but it's certainly diminished by the fact that everyone is aware of the markup and it's the same everywhere.

The worst part is the effort required to see your actual price. Especially if it requires creating an account for a new service.

Great questions that behavioral economics studies.

The answer is that the perceived utility varies on how you perceive the price. This is why an item tagged 10U$S looks less interesting than the item tagged -20U$S- 50% off. The latter looks more valuable to our brain on anchoring, but there really isn't an objective difference. Thus , even though as a user you know the discounts are bs, you still prefer to see the discount thing.

Gratuities have the added complexity that people will tip differently on personal preference. I am one of those that dislike tips. I come from a country where tips are relatively low,and I find the tipping amounts in the U.S. borderline offensive. Are waiters supposed to get 20% of the restaurants revenue in tips? But, its like price differentiation: it allows the same recipients to pay more.

I wish it didn't have to be this way, but if a business does get more money with these systems, they should do it, and if people are willing to pay more money with these setups they will tend to pay for it.

Thought experiment: what would happen if tipping was made illegal?

Would restaurants go out of business because they couldn't pay their servers enough because their patrons weren't willing to pay when the actual cost of dishes was made explicit on the menu?

Or would restaurants ditch table service?

Or would waiters settle for a new lower wage?

What usually happens is that restaurants institute an across the board 18% service charge on all receipts. That covers tips for all the staff.

There are a couple restaurants that have had good success with this.

There are, but at the same time there are restaurants that have had a lot of trouble with this approach because it raises the perceived price of the restaurant. It really seems damned-if-you-do.

Sure, if only some restaurants in an area do this. But what if they all did it?

I'm not trying to jump on you, but I rarely find "what if"-inging collective action problems to be a particularly useful mode of thinking.

"What if"--but they won't, so perturb not those electrons and stick to the real, yeah?

You are missing the point. Changing the law forces all restaurants to play by those rules. If only a handful of restaurants decide to pay livable wages and therefore raise their prices then their competitors will be cheaper. So we know this doesn’t work well. But if minimum wage rises for all restaurants then they will all be on a level playing field. That was the “what if” I was referring to.

Let me give you another example. If one or two car dealerships decide they don’t want to be open on Sundays then their competitors will get that business. So everyone is forced to be open both days to be competitive. But what if all dealers were closed on Sunday? Well, in that case consumers would be forced to do all their car shopping on a Saturday and nobody would lose any business. So this is exactly what happened in Texas. The dealers lobbied to make sure car dealerships can only be open one day per weekend (either Saturday or Sunday, but in practice they all chose Saturday to be open). So that’s the value of asking “what if”.

Many countries have no-tipping cultures. Generally, more eateries are takeout or otherwise self-serve outside of the USA - not because of the tipping, but because of the hellishly low wage servers are paid before tips, allowing American restaurants to effectively pay servers peanuts when business is slow.

Other first world countries' servers are more expensive, and so less plentiful.

It doesn't have to be a thought experiment : just travel to pretty much any other country in the world besides the USA. Surprise: people are running restaurants, not going broke, and waiters are paid for their time like most other workers.

That's not crazy, it sounds like a convenient way for you to justify stiffing all the people these apps help you exploit.

I get tipping at restaurants: it’s an old habit that nobody really wants to try hard to change. There, of course, is no reason for us to build this stupid, old idea into a brand new platform

The reason tipping keeps popping up in new markets (like Uber/Lyft/Instacart/Doordash) is largely the same reason it's so hard to get rid of in existing industries: it allows businesses to advertise lower prices and lets customers actually pay those lower prices if they're willing to take the relatively minimal and sometimes even completely negligible social cost of not tipping.

Just look at how it went with Uber. Uber didn't want tipping to be part of the experience, but they kept lowering driver wages until drivers needed tips to survive and started rating down passengers who didn't offer cash tips. When the problem started becoming severe, they could have solved it by just upping driver wages. Instead, they kept fares impossibly low but added tipping into the app.

Ok, fine, i'll play along. What is a reasonable tip?

Instacart wants me to tip 20%, so that's $40 on a $200 grocery order to carry my groceries 3 miles.

I have no idea what's appropriate, but that seems outrageous.

While that would be ideal, I do think it’s at least slightly crazy to truly expect that people delivering food are not somewhat depending on tips to make it work. That’s just how it goes in the real world!

It doesn't have to go that way if we (all of us, customers and employees alike) refuse to accept that it should go that way.

Either start a campaign or you're seriously busy being disingenuous.

I agree. I was pointing out that if this commenter “expects” the employee is adequately compensated by the price paid to the company for the service, they are mistaken. I don’t think relying on the individual discretion of each customer to willingly part with extra cash for you should be the foundation of a whole job’s viability. But currently, it is.

This certainly isn't how it goes outside of the US. Why should delivering food suddenly change this vs say driving a truck or car share?

I’m not at all suggesting that it should be the way it is. Instacart only operates in the US though, so I figured it was safe to take that as the context.

The US is not the world.

Instacart only operates in the US though, so seemed like reasonable context for the comment I was referring to. But I see your point in my choice of “the real world” in my comment. Badly worded.

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